There has been series of bank failures which was seen traced to
poor and improper management of banking activities.
Government interference through CBN instrument of monetary polices
has gone a long way in bringing some problem under control in financial
institution. Therefore a literature review was made bearing in mind on this
regulations and polices. To achieve this, questionnaires and interviews method
were intensively employee in this study. They were supported by personnel
observation during collection of data. The collect data was presented in table
which proof that government interference has contributed major role in
sanitizing government system in Nigeria.
Furthermore, the study would clearly add to the existing knowledge
on government interference in management of financial institution.
This study strongly advocate for government to have a hand in
selecting and recruiting top management staff of the financial institution to
reduce fraudulent act. Central bank of Nigeria should not be so rigid, they
should strike a medium between financial liberation and occasional intervention
aim at correcting financial failures.
1.1 Background of the study
1.2 Statement of the problem
1.3 Purpose of the study
1.4 Scope of the study
1.5 Significance of the study
1.6 Definition of the
2.1 Central bank of Nigeria policies of financial
2.2 Nigeria financial review in the financial
2.3 Union bank of Nigeria operational rules and
2.4 Government new policy on financial institution
2.5 Government roles in financial institution
Summary of the
3.1 Analysis of data and presentation of
Management has been defines the process of combining and utilizing
organization resources of man material to accomplish organization objective. It
is the process of doing through end with people what then do we actually mean
by interference? Interference according to websters dictionary is to take an
active but unwelcome part in some else activity.
In this study, is has been revealed that this interference on
financial institution by government as a whole is noble in the right direction.
The Nigeria financial system is very vibrant and highly competitive. They have
four basic product line in the banking industry such as deposit base product,
lending-based product fee vase products and technology based product. This was
instituted by the observation during the research that financial institution
benefited immensely by the government on the financial institution
It is a well know fact that number of services financial
institution offers have increased but risk taking which is fundamental nature
of their business remains unchanged. This has led to the conclusion that
management is financial institution is surrounded with risk management which
involves mismatches of asserts and liabilities on other side and it is cost
borrowing and lending on the other side.
The economy end to nurture it along the path of development. The
role of financial institution mostly bank has been constrained by a number of
fact in too past. Price to now, the industrial sector has been characterized by
massive direct government involvement, because of weak technological base, lack
of linkages in infrastructure and policy investment, highly production cost and
goods that were uncompetitive internationally. Overall, the micro Economic
environment was highly unstable, witness capital flight, high interests or
inflation rates, negative real growth rate and fiscal excesses with an external
debt burden of about 27.4 billion as the end of 1997, the repayment burden put
a constrain on growth.
Since 1995, however, the federal government has been able to store
some measure of fiscal discipline through low budge deficits, which achieved
stable interest and exchange rates regimes, while pushing down inflation to a
simple digit of 8.5 percent in 1998.
Aggressive reform and sanitation of the financial institution
source were pursued on the other hand little or no attention was paid to the
vital area of privatization of government utilities liberalization of the
company and improvement of infrastructure.
The above review of the economy has been undertaken and other
financial institutional were suppose to operate and provide finances to the
industrial sector from the above review the researcher, therefore went to use
this study to explore those factors emanated from government interference in
the management of financial institution that inhibited them from effectively
discharging their responsibility to the economy generally using the
generational rules and regulation of Union Bank Plc to determine the extent it
has contributed both positively and negative part of such interference in the
1.1 BACKGROUND OF THE STUDY
The Nigeria institution is very vibrant and highly competitive. It
consist of 105 viable commercial and merchant bank which are privately owned
with a total of 2,400 branches and 5 development bank such as N BC, NIDB PBN
and FMBN owned by the by the government. There are also about 200 registered
non bank finance house of various size. Part of the structural adjustment
programme (SAP) introduced in 1986 was the expansion and diffusion of the
banking and financial institution. By 1992, the banking sector had growth to 67
commercial bank 55 merchant bank, 45 primary mortgages institution, 228
branches of the people bank, 618 finance companies (48 fully incensed by the
CBN) 401 community bank and specialized bank. By the mil 1990’s the was endemic
distress in the financial system, which led eventually to collapse of many of
the institution in the unstuffy many commercial and merchant bank were
liquidated, with 26 banks (13 each of commercial and merchant) liquidate ad
recently as January 16, 1998. In the case union Nigeria Plc survived it. Close
at the operational policy o f union bank Nigeria plc, Enugu revealed that
government interference in management of positive type even though that there
are some risk in embodying such rules and regulations line in their banking
system such as deposit-base product, lending lines in their banking system such
as deposit based products, lending base product fee-base products and
technology base products. Therefore the interference has help them to accept
the risk job of greater mobilization of saving from the surplus units and
channeling them to the deficit productive units of the economy, and to ensure
that no unable project is frustrated due to lack of funds and greater
facilitation of synergies and sartorial linkages within the economy there still
problem resulting in such interference of which union bank are complaining of.
Government interference in the management of union bank Nigeria
plc also covers limits of permissible business, risk concentration, capital and
liquidity adequacy and statutory returns. The monetary aspect of regulatory
includes, control, over loading generally, structure of leading interest rates,
reserve requirement and foreign exchange.
There are also regulation covering adverting staffing loan, loans
to director and inside dealing supervisor is employed to ensure effective
management and control due to the level of our development. These control have
been said to be unwisely and the system cover regulation with too little
supervision and control. The criticism let to gradual deregulation in 1984 and
was subsequently accelerated with the adoption of the structural adjustment
programmes in July 86. The programme was designed to give more room for the
operation of free market force given financial institutions more direction to
their operations and stimulate competitions in the financial system as a whole.
Consequently in 1988, the Nigeria deposit instance
corporation was established with regulatory powers to protect depositors
against bank failures and thereby strength the financial and impacted greatly
on financial environment.
1.2 STATEMENT OF PROBLEM
Despite the interference of government in the management of
financial institution, there is no doubt that a lot of ills are bestting
financial institution existence in Nigeria, especially in the area of control
regulation and operation. Regulation does not guarantee that they will reverse
bank failure an serious banking crises. No matter how effective and through the
regulationary mechanism, the problem may still occur as history has shown it.
Even with high policy and regulation which usually accompany and serious bank
crises or bank failure it is to prevent impact of such failures form
threatening the systematic last resort function on the central bank exist in
protect the aggregate deposit of the system and prevent the collapse of single
institution from destabilizing the entire financial system.
Establishing of more financial institution by both government and
individual was implement to solve the problem of poor service to customers and
also dominance of foreign based bank by Nigeria indigenes to help in
encouraging improved banking system in Nigeria but still their supremely
investment, high production costs and goods that were uncompetitive
internationally, high interest rate and rift among bank directors and
unprecedented industrial unrest within the sector exist due to shallow
acknowledgement policy and regulation in the sector of economy which helps in
paralyzing the while system. Also problems exist due to hardcore of such
regulation and deregulation of policy to the financial institution.
1.3 PURPOSE OF STUDY
The main purpose of the study are:
To find our how union bank of Nigeria plc is employing the
government policy to ensure sound banking system towards the acceleration of
economic development in Nigeria.
To study their growth and survival in the faces of various banking
ordinance that was consolidated in central bank number 24 decree of 1991 and
the present day decrees.
To highlight the enviable policies of union Bank of Nigeria Plc
adopted to keep float against the recently established banking system.
To ascertain the effect of government interference in the
management of financial institution and the type of environment it has created
for the proper existence of financial institution whether it is on the right
1.4 SCOPE OF THE STUDY
This study is interned to cover:
The new policies and decrees introduced in financial institution
since the inception of structure adjustment program in 1996.
The impact of these policies on the operations of union bank of
The challenges passed by these policies and decrees and the
central bank effort to control the problem arises by the implementation of the
polices and regulations.
This study will also cover the problem union emment control in he
management of their affairs and also the position aspect of the policies to the
management of union bank Nigeria plc.
1.5 SIGNIFICANCE OF THE STUDY
The finding and recommendation of this research work would be
useful and serve as a guide to the financial institution and also to government
in formulation policies and decrees relative to the effectiveness of the
institution. This study is pursued with view to highlight growth of financial
institution since government interference in their operations with particular
analysis on the union bank of Nigeria plc a commercial bank which can sever as
a guide to other bank. The study will be significant in examining the
achievement of government the presence of increasing problem confronting this
sector of the economy mostly on the part of monopoly of the rendering of
services to entrepreneurs foreign connecting cover the indigenous ones poor
customers services high rates of interest high rate of inflation constant bank
crises and increasing competition among the institution.
The study will provide a data-base for future researches in
government interferences in the management of financial institution and add to
the material out standing in the library. The study would be of importance to
only reader and assist government and financial institution in reviving their
various policies. Plans decrees regulation deregulation with respect of
management of financial institution and the fundamental services they render.
1.6 DEFINITION OF TERMS
Financial institution: Is the organization that responded to the
financial system in the country. They provided both short term and long term
Effective operation: Being active progressive and consistent in
financial institution operation on service.
Regulation: regulation is an act of being regulated or control by
role government a group of people
Policy: A selection planned line of conduct in the light at which
individual decision are made and co-ordinated achieved this can be chosen by
government or business.
Immensely: Valued too much
Management: Managing or being managed by he body of those in
position of administrative authority
Interference: Interferences is to taken on active but unwelcome
part in some one port else activity
TERMS AND CONDITIONS APPLY
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